Zynga Cutting 5% of Workforce, Shutting Down 13 Games

Zynga CEO Mark Pincus confirmed layoffs at the casual gaming company Tuesday, with cuts going as deep as 5% of the full-time employees at the company or 150 people.

“We are sunsetting 13 older games and we’re also significantly reducing our investment in The Ville,” Pincus told Zynga employees in an internal memo supplied to WIRED by the company. “We are closing the Zynga Boston studio and proposing closures of the Zynga Japan and UK studios. Additionally, we are reducing staffing levels in our Austin studio. In addition to these studios, we are also making a small number of partner team reductions.”

Along with fewer employees, Pincus outlined a cost-reduction plan that also includes significant cuts in spending on data hosting, advertising and outside services, primarily contractors.

“These reductions, along with our ongoing efforts to implement more stringent budget and resource allocation around new games and partner projects, will improve our profitability and allow us to reinvest in great games and our Zynga network on web and mobile,” Pincus said.

Word of the layoffs first hit Twitter Tuesday morning, causing some to speculate that the troubled gaming company was trying to bury the news during an Apple product launch. Zynga employed nearly 3,000 people as of March. A tweet from former Apple and Sony designer Justin Maxwell, said employees in Austin received two hours to vacate their offices.

Austin is one of several cities, including Boston and New York, where the San Francisco-based casual games company acquired competitors as part of a binge-like bulk up. Cuts in one (and perhaps more) of those cities call into question CEO Mark Pincus’ strategy for Zynga, and add to pressure on the company from investors. Zynga shares are down 75 percent in the last six months.

Pincus plans to outline his plans to turn things around in more detail during a webcast Wednesday. Shares of Zynga stock were up almost 4 percent in after-hours trading.